Thomas Cook pension trustees seek assurances over rescue deal

Thomas Cook’s pension trustees are seeking assurances and incentives over a £900m rescue deal which could see shareholders and the scheme losing out.

Initially reported by Sky News, it was revealed that the trustees were demanding sweetened terms in exchange for their backing of the proposed rescue deal.

The trustees were seeking equity in Thomas Cook once the restructuring operation had taken place, funding guarantees and a commitment from the Chinese investor Forsun to continue with the existing £25m annual pension contributions.

The firm is in talks with Fosun over a deal that would see the investor inject £450m into the company, with banks and lenders matching the investment with a debt for equity swap.

This could leave shareholders being effectively frozen out by the company restructuring and the scheme left without its previous assurances.

Thomas Cook’s pension scheme is currently in surplus and is seeking a continuation of the annual contributions that are designed to ensure that the scheme is fully funded.

According to Sky News, one stakeholder said that the trustee requests were “ludicrous given the haircuts other creditors were taking”.

Reportedly, The Pensions Regulator has been involved in talks with the firm and trustees, while Grant Thornton and Smithfield have been appointed by the Thomas Cook trustees.

A crucial board meeting is expected to take place tomorrow (11 September) to determine what the best course of action is to help complete the deal within four weeks.

Under the currently proposed deal, Fosun would inject the £450m in exchange for 75 per cent of Thomas Cook’s tour operating business and 25 per cent of its airline, as EU ownership rules prohibit the Chinese firm from controlling the airline business outright.